Wednesday, September 30, 2009

Prime Minister Nouri al-Maliki is gearing up to announce his State of Law List that will compete in the January 2010 parliamentary elections. He has faced his first setback however. Former speaker of the legislature Mahmoud al-Mashhadani’s, a Sunni politician from the National Independent Trend, has withdrawn his group from the State of Law. Mashhadani was the first well-known figure to publicly say that he would join with Maliki on September 12, 2009. When the Maliki’s coalition is revealed, it will most likely consist of his Dawa Party, the Dawa-Iraq Organization, former national security adviser Mowaffaq al-Rubaie, independents from the old United Iraqi Alliance, the Arab Front, and members of the Shammar tribe. The Prime Minister will need to find more partners if he hopes to successfully challenge the new Iraqi National Alliance that consists of the Supreme Islamic Iraqi Council and the Sadrists.

In July 2008 when parliament was discussing the 2009 provincial vote, Kirkuk led to a walkout and veto of the original election law. The 2009 bill called for a delay in balloting in Tamim as a power sharing agreement was implemented. The Kurdish bloc walked out over it, and eventually President Jalal Talabani of the Patriotic Union of Kurdistan and Vice President Adel Abdul Mahdi of the Supreme Islamic Iraqi Council vetoed it. The final version of law also postponed voting in Tamim until a special committee could come up with a deal between the major groups in the province. The committee did nothing, and provincial voting has never happened there yet.

National elections are much more important, so it’s unlikely that Kirkuk will hold up the vote. If parliament can’t pass a new bill by October 15, 2009, Iraq will simply revert to the old 2005 law. The major difference is that the proposed legislation includes an open list that allows voters to pick either lists or individual candidates, while the old one is a closed list where the public can only vote for lists, and the parties pick the politicians.

Here is an Al-Jazeera report from September 12, 2009 of Iraqi officials and businessmen from Najaf complaining about Iran’s commercial deals in the holy city. While Iran provides the largest number of religious tourists to Najaf, around 1,200 a day, locals accuse Baghdad of signing bad deals that give certain companies a monopoly over the trade. Businesses that were not in on these early contracts claim they can’t compete.

While Iran plays an important role in Iraq’s economy, their activities are seen as a mixed bag. Iranian pilgrims pump millions of dollars into Iraq, and Tehran has heavily invested in improving the infrastructure in both Najaf and Karbala. At the same time the beneficiaries of this business seems to be very narrow, with an eye towards political friends of Tehran. Both cities would be severely hurt if Iranian tourism dried up however, so the current situation is seen as both an opportunity and a necessary evil.

Al Jazeera interviews the former Iraqi Planning Minister, the Special Inspector General for Iraq Reconstruction, and a senior lecturer from the London Metropolitan University on a UNESCO report on Iraq's political, economic, security, and social development, and the current situation in the country.

August and September 2009 has seen plenty of examples. In August there were eight such attacks ranging from incidents involving a police general to a mayor to a member of parliament. September 1 to 28 has seen fourteen including an attack on the head of the Iraqi Islamic Party Osama al-Tikriti. The assassinations are a sign that militants are still active in Iraq. At the same time it shows their relative weakness and change in tactics. Shiite militias are no longer involved in the sectarian war, Special Groups only carry out occasional attacks, the Sunni insurgents are no longer about holding territory outside of Mosul. This type of low-level violence is the new norm in Iraq, and likely to continue for the foreseeable future since it is nearly impossible to stop.

With the joint patrol concept creating that many divisive opinions, they’re unlikely to be implemented for now. There may be specific towns where local officials might be able to work something out, but otherwise the issue is becoming a political football between Arabs, Kurds, and Turkmen. With parliamentary elections coming up in January 2010 as well, politicians are likely to take up the issue one way or the other to promote their own agendas further complicating the matter.

Sunday, September 27, 2009

This year Iraq is embarking on a massive development plan to increase its electrical network. It is buying new turbines, constructing new power plants, and garnering international loans and other financial assistance to pay for it. Iraq still lacks the capacity to supply all the power the country needs however.

For five straight quarters Iraq has increased its electricity production. The problem is that the supply is not close to meeting demand that has sky rocketed since the 2003 invasion. Not only that, but the power system is so old and decrepit after years of wars, sanctions, and lack of maintenance, that it can’t handle the amount of electricity that is needed. If Iraq was to ever install all of the power plants it requires, the entire grid would have to be rebuilt to handle the capacity, and Iraq does not have anywhere near the money to pay for that.

Friday, September 25, 2009

Iraq’s Kurds remain the most unified ethnosectarian voting bloc in Iraq. As the Sunnis and Shiites split up into smaller factions, the two major Kurdish parties, the Patriotic Union of Kurdistan (PUK) and Kurdistan Democratic Party (KDP) remain largely popular amongst their constituency, and in control of the Kurdistan Regional Government (KRG) and the majority Kurdish regions within the disputed territories in northern Iraq.

Either way, the Kurdish Alliance alone is still likely to be one of the most powerful groups in parliament, and crucial to any new government created after the 2010 vote. They will probably walk away with around 40 seats, and perhaps 50 if the Change List does follow through with their promise to become a united Kurdish front in parliament. In 2005 the Kurdish Alliance was a key component in the creation of both the governments of Ibrahim al-Jaafari and Nouri al-Maliki. Since then the PUK, and especially the KDP have turned into some of the harshest critics of Maliki’s rule. In January and December 2008 they even threatened no confidence votes against the Prime Minister. With an expected 40-50 members in the new legislature, they could be the greatest impediment to Maliki returning as Iraq’s leader. Iraqi politics are in a period of flux however, so deals are still to be made before and after the 2010 election that could dramatically transform the situation. The Kurds however, are in a position to be one of the king makers in Iraqi politics.

The main motivation for Allawi to join the National Alliance is to become prime minister again, a promise he has supposedly gotten from them. After the Supreme Council failed to bring Prime Minister Nouri al-Maliki into the INA, they then turned to Allawi as a replacement candidate to try to unseat Maliki. Allawi also allegedly secretly went to Iran in August 2009 and got their blessing to become prime minister. According to Al-Quds Al-Arabi, Iran was putting heavy pressure on Maliki to join the new alliance, and when he refused, they threatened him by saying that he would be blocked from returning to his office. This is obviously their reason for backing Allawi if these rumors become true.

Stories about everyday life for Iraqis have been the least reported in the West. The vast majority of the news has been about the daily violence the country has been wracked with since the U.S. invasion. It’s often overlooked that with the improvements in security, many people in Iraq have been able to return to their normal lives. This is especially true in northern and southern Iraq that has seen far less violence over the last year. For example, in mid-September the Muslim holiday of Eid ended, and Iraqis in Baghdad celebrated on the banks of the Tigris River. The Los Angeles Times’ Babylon & Beyond Blog had the following pictures of the people gathering for the end of the festivities.

When Maliki’s State of Law list ran in the 2009 provincial elections they promised better governance and services, and are doing the same for the 2010 national ballot. This completely ignores the financial situation in Iraq. With the world recession the country’s main source of revenue, oil, took a precipitous drop in value. The 2009 budget saw large cuts as a result, with Iraq’s 18 provinces receiving a $1,748.2 million decrease in their capital budgets that pays for infrastructure and investment, while operational costs that go towards salaries, pensions, etc. ate up 80% of the overall budget. Oil prices have begun to creep back up, but so far, not enough to make a large increase in the 2010 budget. Maliki therefore, can talk to governors and provincial councils all he wants about better services, but there is simply no money to make that a reality right now.

Wednesday, September 23, 2009

In September 2009 the Oslo Stock Exchange announced that they had investigated DNO International, a Norwegian oil company, for insider trading involving the Kurdistan Regional Government’s (KRG) Resources Minister Ashti Hawrami. In October 2008 DNO sold 43 million shares to a then unknown client for $29.7 million. The buyer turned out to be Turkey’s Genel Enerji and Minister Hawrami served as the middleman. The Oslo Stock Exchange originally fined DNO for insider trading, but that charge was later dropped. The company still had to pay $170,00 for keeping part of the transaction secret.

Now that this deal has become public, Minister Hawrami and the KRG have been embarrassed. Kurdistan has suspended DNO’s work for 6 weeks, and demanded that it repair the KRG’s reputation. They have even gone so far as to say that they might void DNO’s contract if they don’t give a proper explanation of what happened. The KRG has also issued a statement saying that no officials benefited from the sale of DNO’s shares, and that they were only trying to help the two companies so that they could work in Kurdistan. The Baghdad Kassakhoon blog points out that Minister Hawrami violated at least two Iraqi laws that ban public officials from taking part in business transactions as well. Since Hawrami is such an important figurehead in the KRG’s attempts to create their own independent oil policy nothing is likely to happen to him.

DNO is one of three corporations, along with Genel Enerji, who are pumping and exporting oil from Kurdistan. DNO operates the Tawke field, which is producing 40,000-50,000 barrels a day, while Genel, along with Addax Petroleum, run the Taq Taq site. On June 1, 2009 the two fields began exporting, although none of the companies have been paid for their work so far, and may not for years.

If the KRG follows through with its threat and ends DNO’s deal to run the Tawke field it could have wide ranging effects upon Kurdistan’s attempts to attract foreign energy companies to invest in the region. The on-going dispute between Baghdad and the KRG over who has the right to sign oil deals and develop petroleum fields has already kept away many major oil companies from operating in Kurdistan. That argument is also preventing DNO, Genel Enerji, and the other companies pumping oil from being compensated. Now, if the KRG punishes DNO that may keep away even more companies who will look at Iraq in general as having a bad business environment.

DNO and Genel Enerji Operations In KurdistanDNO owns 55% of the Tawke project and operates it, while Genel Enerji owns 25%DNO is also working at the Dohuk site with GenelGenel Enerji owns 44% of the Taq Taq project along with the Swiss Canadian Addax PetroleumHeritage Oil that is also working on four fields in the KRG recently bought Genel Enerji Kurdistan

Tuesday, September 22, 2009

The Arab press is reporting that former Prime Minister Iyad Allawi has either agreed to or is in the process of joining the new Iraqi National Alliance (INA) put together by the main Shiite parties such as the Supreme Islamic Iraqi Council (SIIC) and the Sadrists. While members of the SIIC are publicly denying it, Allawi has supposedly agreed to join the coalition in return for being their candidate for Prime Minister. Although this would seem to be an alliance of complete opposites, since Allawi appeals to many Sunnis and former regime members and the SIIC and Sadrists are opposed to the return of Baathists, what they have in common is a desire to block Prime Minister Nouri al-Maliki from returning to the top position in Iraq.

The National Alliance still has additional moves ahead and needs to define itself. First, they seem to be planning a raid on Dawa members, hoping to draw some away from Maliki. Second, Allawi will probably have to compete with Vice President Adel Abdul Mahdi for the nomination of prime minister. Third, the INA has no platform. The only thing they have in common is opposition to Maliki, but that’s not something they can openly run on. In fact, if Allawi does ultimately join the coalition, it’s likely to muddle their message even more since it would include both secularists and Islamists, centralists and federalists, critics and friends of the Kurds, opponents and sympathizers with the Baathists, etc.

SOURCES

?, “Source in the “coalition” is likely to hold a preliminary deal with Allawi’s list to reduce the chances of winning the list of al-Maliki,” 9/22/09

Monday, September 21, 2009

Iraqi political parties and figures continue to make new coalitions and conduct negotiations with each other in preparation for the January 2010 parliamentary elections. The two major coalitions, Prime Minister Nouri al-Maliki’s State of Law and the new Iraqi National Alliance are both seeking a wide variety of new partners, some completely unexpected, which might engulf the smaller lists.

In a completely unexpected move, former Prime Minister Iyad Allawi of the Iraqi National List is now flirting with the National Alliance. Allawi is currently aligned with parliamentary Saleh al-Mutlaq in what could be called the neo-Baathists since they are secular, nationalists that appeal to many former regime elements. If Allawi were to join the National Alliance, and they accepted him, it would show that they only care about power and nothing else. There is already no ideological coherence to the list as is. The Sadrists and former Prime Minister Ibrahim al-Jaafari for example, preach nationalism, a strong central government, and are critical of the ruling Kurdish parties. The SIIC on the other hand, are proponents of federalism and the closest allies of the Kurds in the country. The Sadrists and Supreme Council do agree on excluding Baathist from government, and yet that is exactly who Allawi appeals to. If he agreed to join his Iraqi National List would probably break apart, and he would be overwhelmed by the larger parties in return for a nominal ministership.

In Anbar, Sheikh Ahmad Abu Risha has formed a new coalition called the Iraqi Unity List. It mostly consists of small tribal groups, but pulled a coup in bringing in the Constitution Party of Interior Minister Jawad Bolani. Both the National Alliance and Maliki have talked with the Minister, and many think Bolani was going to run for prime minister. Abu Risha has been flirting about running with Maliki for months now however, so that could mean Bolani does not aspire to the top spot in Iraq.

Overall, the fracturing of the Sunnis into smaller parties, may mean that they will be overwhelmed by the larger Shiite ones. Former head of the Iraqi Islamic Party Vice President Tariq al-Hashemi for example, may run with Maliki. All of the leading Anbar sheikhs are trying to make ties with Shiites as well. Like Allawi, they may gain a few nominal ministerial positions, but be subordinate to the Shiite parties.

Arguments over a closed or open list have also been caught up in the larger political struggle in Iraq between Prime Minister Nouri al-Maliki and his detractors. The new Iraqi National Alliance made up of the Supreme Islamic Iraqi Council, the Sadrists, and former Prime Minister Ibrahim al-Jaafari have been pushing for a closed list because it benefits the large parties, while the Prime Minister supports an open list. This rivalry will now play out in parliament as it discusses the draft election law.

Thursday, September 17, 2009

McClatchy Newspapers got a hold of the Integrity Commission’s 2008 report on corruption in Iraq. The Commission is the top anti-corruption body in the country. The report was deeply critical of Iraq’s ministries and politicians, who were accused of actively stopping investigations.

First, the Commission had a hard time following up on its cases. Over $1.3 billion worth of corruption cases were dropped in 2008, with the most coming from the Defense Ministry. That represented only 11% of the total cases pardoned however, with the others having no monetary value given to them. 2,772 defendants were also pardoned during that time, mostly under the 2008 Amnesty Law. That bill was supposed to help with reconciliation, but it also allows amnesty for corruption cases. Another barrier is Article 136B that lets ministers and other high officials to stop the Integrity Commission’s work. Iraq’s ministries blocked 210 investigations in 2008, including several cases worth $1-$6 million, and a look at two ministers. The Oil Ministry was the largest culprit in using 136B. The effect of the Amnesty Law and 136B has been only 397 convictions from 2004 to 2008. The highest number of convictions came from the Interior, Finance and Defense ministries, in that order.

Iraq’s politicians have been no better at following transparency rules. By law, Iraqi officials are required to disclose their finances each year, but this is hardly ever followed. Iraq’s Prime Minister, President, Vice Presidents and deputy Prime Ministers have never turned over their records. Of Iraq’s ministers, only the Oil Minister has disclosed his finances, and done so twice. There are 275 members of parliament, none disclosed their finances in 2008, and only 14 did so in 2007.

Corruption reached endemic levels under Saddam, and has seemingly gotten no better since his overthrow. Transparency International, which monitors corruption across the globe, has consistently ranked Iraq at the bottom of its list since 2003. In 2008 for example, it was ranked the third most corrupt country in the world out of 180 nations.

Transparency International’s Annual Corruption Index Ranking of Iraq 2003-20082003 Tied for 113 out of 1332004 Tied for 129 out of 1462005 Tied for 137 out of 1592006 Tied for 160 out of 1632007 178 out of 1802008 177 out of 180

Wednesday, September 16, 2009

Iraq’s political parties are moving into high gear looking for partners to run with in the January 2010 parliamentary elections. Some old alliances are being reformed, and new ones are in the process of forming. As before, however, Prime Minister Nouri al-Maliki is at the center of things, and most organizations are thinking in terms of what to do in relation to him.

Sunnis

There are two main groups of Sunni politicians. First are the provincial parties that want to gain seats in Baghdad. Anbar’s sheikhs are one such group that has recently emerged. What was once the Anbar Awakening has now split into three main parties led by three leading sheikhs. There is the Anbar Awakening Council led by Sheikh Ahmed Abu Risha, the Anbar Salvation Council of Sheikh Hamid al-Hayes, and Sheikh Hatim al-Suleiman’s Anbar Salvation National Front. After participating in the 2009 provincial elections, all three are now looking for national office. Sheikh Hayes has joined the new Shiite led National Alliance. Sheikh Suleiman has aligned himself with the Banners of Iraq list that includes Karbala’s Yousef al-Habboubi, who won the most votes there in 2009, but only got one seat, because he ran alone. Abu Risha, on the other hand is in negotiations with Maliki. All three are thus seeking ties with Shiites to ensure a better chance of victory.

The new coalition of Saleh al-Mutlaq and Iyad Allawi could be called the neo-Baathists. They appeal to many Sunnis of the former regime, and preach Iraqi nationalism and secularism. Interior Minister Jawad Bolani, who is an independent Shiite was supposed to run with them, but he may join the Shiite National Alliance instead. Allawi still has an outside chance of becoming prime minister as well.

Shiites

On the Shiite side, there are two main coalitions running in opposition to each other. First is the new Iraqi National Alliance. This is a revived version of the United Iraqi Alliance that won the most seats in parliament in the 2005 elections. The new Alliance is made up of the Supreme Islamic Iraqi Council (SIIC), the Sadrists, former Prime Minister Ibrahim al-Jaafari’s National Reform Party, the Dawa-Iraq Party, and two Sunnis, Sheikh Hayes of Anbar and Khalid Abd al-Wahaab al-Mulla from Basra. The coalition was pushed hard by Tehran, but faced a major setback when the Supreme Council’s leader Abdul Aziz al-Hakim passed. That has left a leadership vacuum. Hakim’s son Ammar succeeded him as head of the SIIC, but he doesn’t have the same standing. Jaafari, Vice President Adel Abdul Mahdi, and perhaps Interior Minister Bolani may all emerge as its candidate for prime minister, but all those names alone show that it may be rudderless. The new alliance, despite the inclusion of two Sunni figures, is also seen as sectarian, since being Shiite is the only thing that really unites these parties that disagree on just about everything. The one issue that does bring them together is their opposition to Maliki.

Prime Minister Maliki’s State of Law is the other major list. Unlike the National Alliance, Maliki is running on a nationalist agenda, and stressing cross-sectarian ties. That didn’t stop the Prime Minister from seriously consider running with them however, but their refusal to assure him of being their only candidate for prime minister ended those talks. Maliki is now scrambling to find new allies. Former speaker of parliament Mahmoud al-Mashhadani, who was once part of the Accordance Front, was the first to formally announce he would run with the Prime Minister. Mashhadani brings with him some former members of the Basra based Fadhila party. As stated before, Sheikh Abu Risha of Anbar is also in talks with the State of Law. Other possible deals might be made with al-Hadbaa, the Islamic Party, and perhaps even the League of the Righteous, an Iranian-backed Special Group that has recently announced that it wants to join the political process.

Maliki’s greatest problem however, is not so much who he will run with but how he’s currently governing. His claim of securing the country have been shaken by the August 2009 bombings, and he has been unable to deliver better services with the large budget cuts Iraq is experiencing. He still has one ace up his sleeve the referendum on the Status of Forces Agreement with the Americans, which he is pushing to coincide with the 2010 vote. That could distract the Iraqi public from domestic issues.

Kurds

The two ruling Kurdish parties the Patriotic Union of Kurdistan (PUK) and the Kurdistan Democratic Party (KDP) have said that they will run together in 2010. At the same time, they have rejected any ideas of running with others. They still have a very close alliance with the Supreme Council however, so after the vote it’s likely that they will join together to try to put together a ruling coalition to elect a new prime minister. Both are actively opposed to Maliki as well. A new twist to Kurdish politics is the fact that the new Change Party has also announced that it will run in the national elections. The PUK and KDP still have a solid base, but the new Change List will cut into their monopoly on the Kurdish vote as they did in the recent Kurdish regional vote. Maliki may also make a run at convincing the Change List to run with him.

Conclusion

Iraqi politics are in a period of flux. In 2005 the Shiites, Sunnis, and Kurds ran in three large coalitions, and took in the majority of votes. Now all three of those groups are fragmenting. On the other hand, Iraqi Arabs at least, are moving away from sectarian politics. The Sunnis are seeing the greatest change with the Accordance Front disintegrating, and new parties and politicians emerging. The PUK and KDP are facing a new challenge from the Change List, while Prime Minister Maliki has broken with the other Shiite parties. The major question now is who else will Maliki align himself with, and will that give him enough votes to remain prime minister? On the other hand, will the National Alliance, PUK, and KDP be able to stop him? The real battle for power then, is likely to play out after the election in the backroom deals to form coalitions rather than the pre-voting negotiations over who will run with whom.

Two and a half months since the June pullback, and U.S. troops find themselves concentrating on Iraq’s rural areas and reconstruction projects. Maliki’s restrictions on joint patrols in major cities are still in place with the exception of Mosul. Out in the countryside however, the rules are not as strict and U.S. troops have been going out with their Iraqi counterparts. Americans are also allowed to check on reconstruction projects with Iraqi approval, which gives them another way to get out of their bases.

The reason that Baghdad has placed such tight limits on the U.S. is because of Maliki’s 2010 re-election campaign. One of the issues that he is running on is the claim that he got the U.S. to leave Iraq. The Prime Minister is also pushing for the referendum on Status of Forces Agreement to coincide with the January voting. If Iraqis vote it down, U.S. combat troops will have to leave Iraq by January 2011, instead of the planned for December 31, 2011 date. Maliki’s plans have been complicated by the recent increase in deaths, but so far he seems willing to accept these casualties because asking for U.S. aid would be seen as a major reversal for him. This gamble may not pay off as the August 19, 2009 Baghdad bombings have brought into doubt his whole approach to security.

SOURCES

Alsumaria, “Iraq Commander: No need for US troops,” 7/21/09

Gatehouse, Gabriel, “US troops back on patrol in Iraq,” BBC, 7/28/09

Knights, Michael and Ali, Ahmed, “Putting Iraq’s Security Agreement to the Vote: Risks and Opportunities,” Washington Institute for Near East Policy,” 8/24/09

Monday, September 14, 2009

Iraq’s Electricity Minister gave a press conference on September 7, 2009 to try to explain Iraq’s long, hot summer. The Minister said Iraq is facing five problems with its electricity supply. First, the country does not have enough fuel to run some of its power plants. Second, the country’s budget problems are limiting the ministry’s spending power to boost and maintain production. The Electricity Ministry’s budget saw a huge 144% increase from $1.389 billion in 2008 to $3.39 billion in 2009, but almost all of that went to operational costs. In 2008 the Ministry received $89.1 million for its operational budget, which goes towards salaries, pensions, etc., and $1.3 billion for capital expenditures that paid for infrastructure, and other investments. In the 2009 budget, operational costs shot up 2492% to $2.31 billion, while the capital budget decreased 17% to $1.08 billion. Another issue is that the Ministry has barely been able to spend its money. In 2008 it only expended 12% of its budget. Third, the water shortages and drought are reducing hydroelectric power production. Fourth, the Minister said that his staff had taken serious personal losses, noting 1,000 had been wounded or killed. His last remark was that the huge increase in sandstorms this year is straining the ability of the Ministry to maintain and clean its equipment.

On the positive side, the Minister said that by the end of the year General Electric and Siemens AG should begin work on installing new generators, providing technical assistance and training, and providing spare parts as part of a $3 billion deal signed in December 2008. The Ministry didn’t have the money to pay the two companies at first, but the Finance Ministry has finally okayed the transfer of $2.4 billion to them. Together they are expected to add up to 10,300 megawatts.

As reported before, Iraq has consistently boosted its power production in recent years. According to the Special Inspector General for Iraq Reconstruction, the Electricity Ministry has increased electrical output for five straight quarters. From April to June 2009 average daily production stood at 124,713 megawatt hours. One factor in this increase is the boost in energy imports from countries like Iran. In the second quarter of 2009 Iraq imported an average of 16,237 megawatt hours per day, an 82% increase from the same period in 2008, and a 118% increase from the second quarter in 2007. The problem is that demand has consistently increased since the 2003 invasion above supply, and power delivery is inconsistent across the country. With improved security, the public is also demanding more services. Finally, Baghdad is trying to entice foreign companies to invest in Iraq, and officials are worried that the inconsistent electricity will keep them away. The question is whether Iraq will be able to add enough to its power grid to meet all of these different needs.

Today CNPC is back at work at the Ahdab field, but tensions are still high. Locals are still upset that they are not benefiting from the oil deal, and CNPC plans on bringing in hundreds of Chinese workers soon to work on a facility, which could make things worse. Baghdad is trying to gloss over the matter, claiming everything is fine. CNPC’s operations in Wasit could be a sign of things to come as Iraq is trying to entice foreign companies to invest in its oil sector. New corporations could face the same kinds of protests by locals, provincial governments, and parliament. That would only cause further problems for Iraq’s oil plans, which have largely gone unfulfilled.

Friday, September 11, 2009

At the beginning of September 2008 the Iraqi Oil Ministry signed a preliminary deal with Royal Dutch Shell to exploit natural gas in the Basra area. It was only the second agreement signed between Iraq and a foreign company to exploit its natural resources since the U.S. invasion in 2003. The Oil Ministry has been criticized by a variety of different groups within Iraq for this action, leading to inertia one year later. Now it’s been announced that Shell will have to wait even longer as officials say that nothing can be done until after the January 2010 Iraqi national elections.

Iraq’s natural gas is largely underdeveloped, but has huge potential. Like the country’s oil it is a highly contested resource. On the one hand the Oil Ministry believes that foreign companies are required to exploit it, and the Oil Minister believes he can make these deals with only cabinet approval. Iraq’s parliament objects to this, claiming that they should be included in the negotiations, and have any contract ratified by them. There are also nationalist factions, and those that mistrust foreign companies, that think that the gas, like Iraq’s petroleum, should only be developed by the state. All of these arguments have held up the Shell-Mitsubishi deal for one year now, and there’s no telling whether the 2010 parliamentary elections will allow any further movement. This is the price foreign companies have to pay for attempting to do business in Iraq right now since the government is largely incapable of making big decisions because it is so divided and dysfunctional. In the meantime Iraq will be wasting most of its gas until some kind of final deal is worked out.

If the Arab League announcement is followed through with, then this whole episode may be wrapping up. Maliki will have achieved his goal of distracting public attention away from his rule and the Iraqi security forces, to Syria and the Baathists. With all the fury and announcements, people will also probably forget that the government came out with two contradictory stories of who was responsible for the August 19 bombings. Maliki will then be able to return to the campaign trail claiming that he stood up for Iraq against the terrorists, even if he probably accused the wrong ones.

On September 3, 2009 on a vote of 17 for, 7 against, and 3 abstaining, Salahaddin’s provincial council dismissed Governor Mutashar al-Aliwi. The council said that the governor refused to appear before them for questioning. No other reasons were provided. The governor and council have only been in office since April 2009.

Aliwi is a member of the Iraqi Accordance Front, which is led by the Islamic Party. The Accordance Front tied for first place in the 2009 provincial elections. Former Prime Minister Iyad Allawi’s Iraqi National List was the other first place winner, and they, along with other smaller parties, formed a ruling coalition with the Accordance Front. Some member of that group had to vote for Aliwi’s removal for it to be successful.

Tuesday, September 8, 2009

An executive from Talisman Energy of Canada said that companies exporting oil from Kurdistan might not be paid for years. In May 2009 it was announced that the two fields that were producing oil in Kurdistan, Tawke, operated by Norway’s DNO, and Taq Taq run by Turkey’s Genel Enerji and Canada’s Addax, could export their products. The Kurdistan Regional Government (KRG) agreed to deposit all of the profits with the central government in return for the right to sell its petroleum internationally. This was seen as a major breakthrough between Baghdad and the KRG who have been arguing over who has the right to explore, produce, and export oil for several years now. There continues to be one main sticking point however, Baghdad refuses to pay the companies, and the Kurds have not paid them either. The Talisman executive, whose company has begun exploration work in Kurdistan, told Reuters that at the earliest, Iraq could work out a payment deal after the January 2010 parliamentary elections. At the latest, he warned that it could take years. This could have a severe impact on the Kurds’ plan of creating their own independent petroleum policy. Unless the companies get paid, they will only agree to small-scale exploration and drilling work, because any larger investment will not be compensated. In the meantime, Baghdad is benefiting because the extra revenue is going into its coffers at no cost.

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About Me

Musings On Iraq was started in 2008 to explain the political, economic, security and cultural situation in Iraq via original articles and interviews. If you wish to contact me personally my email is: motown67@aol.com